Who Should Be Your Power of Attorney or Trustee?

Video

Hi folks, it’s Andy Stautz at Stautz Law. I’m back with another talk about an estate planning topic. And this is another one of those overlooked things, in my opinion, and that is. Whom to choose for your fiduciaries. 

What are “Fiduciaries” in Estate Planning?

What do I mean by that? Well, as part of your estate plan, I’m always, in every case, going to recommend that you include a financial power of attorney. And an advanced directive for healthcare. And you’re also going to need in your will or in your revocable trust (any trust, really) you’re also going to need fiduciaries there.  

So you need someone to be your power of attorney. That’s one fiduciary. You need someone to be your Health care representative. That’s another one. You need someone to be your personal representative. (You know, the executor in old language) of your estate if you’ve got a Will. You also need a successor trustee in the case of a revocable trust.  

That’s a lot of different roles.  

Key Point: You Can Choose Different People for Different Roles

I think it’s important to point out that it doesn’t have to be the same person for all of them, right? You can choose one person and say, you know, this person really knows about my values, ethics. You know, regarding healthcare, they can be a great healthcare representative where they need to decide, you know life support or you know medical procedures. 

But maybe they don’t have a financial mind or they’re not good with numbers and accounting. Well, it’s OK! You can have a healthcare representative who’s good at one thing, you can choose someone else to be a successor trustee or a financial power of attorney.  

So that’s one big point: Choose your fiduciary or fiduciaries based on what they’re good at, right?  

Being an Executor is Not an Honorary Position

Which brings me to the second point. A fiduciary appointment is not an honorary position. I think people you know say, oh, you know. My spouse is the most important person in my life. I want her to be my executor. Or I want him to be my successor trustee. Or parents.  

But here’s the thing: One: It’s a lot of work. It comes up all the time in estate administrations where at first a personal representative will say, oh, I don’t want the fee for my work on the estate as personal representative. And I say track your time anyway. And then months and months and months later, after doing all the work, it’s like, well, yeah, I do want the fee; that that was more work than I expected. So, you know, you gotta consider it is work.  

Two: it requires certain skills which we touched on earlier. You know, if it’s a trustee role and there’s going to be accounting; an executor or personal representative role where you need to make an inventory and you need to get things appraised. You know you need to make sure you get the right skills.  

And third is emotions. You know your executor acts when you are dead, so if it’s someone really close to you, they’re going through a lot emotionally. They’re going to be grieving you. And they might or might not want to have this extra administrative burden on top of their grief. It’s just not a good time to be asked to sort through all that.  

Common Examples of Fiduciary Choices

So. Those are kind of your big concerns. So the classic choice for lots of these fiduciaries is family members, and that’s great because you know, if you’ve got family members you that’s where the trust comes from. You know them; you trust them. That’s the most important thing. But like I said it it’s a big ask. It can be it can be heavy.  

Your other option is an independent or corporate fiduciary. So you know banks have trust departments, they can do this for you. There are independent fiduciaries out there whose whose job it is to serve as a personal representative or successor trustee.  

And I have heard from time to time of attorneys doing it for their clients. I don’t do that. I think there’s a an implicit conflict there. I won’t serve as a fiduciary for clients, where I’m also the one putting together the trust. But you could always go to a different attorney, maybe to see if they do that.  

So that’s a big picture for you. You know, lots to think about, but you need to kind of balance all those considerations and the choice you make is going to be different for everybody. So I’ll probably return to this in another talk because there are a couple more things I didn’t get to, but this has been long already. Thanks for listening and I hope it helps you as you’re as you’re planning and give me a call when you’re ready to talk. Bye now.